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State's nursing homes cut staffs, lower wages, investigation shows

Ventura County Star
By Christina Jewett and Agustin Armendariz, California Watch
July 3, 2010

California's nursing homes have received $880 million in additional funding from a 2004 state law designed to help hire more caregivers and boost wages.

But 232 homes did just the opposite. They either cut staffs, paid lower wages or let caregiver levels slip below a state-mandated minimum, a California Watch investigation has found.

The homes that made these cuts collected about $236 million through 2008, the last year of available data. That's more than a quarter of the total Medi-Cal funding increase shared by the state's nursing homes. But the law that made the extra money possible included few safeguards to ensure that patient care improved.

Many nursing homes appeared to use the cash infusion to help bolster their bottom lines, according to a California Watch analysis of state nursing home data. Among the 131 homes that cut staffs by 2008, the median profit was 35 percent more than other homes in the analysis.

At the same time, the analysis shows, about two dozen homes that made the deepest caregiver cuts had about one-third more deficiencies than other state facilities. State inspectors noted a litany of violations that included neglecting bedsores and giving patients the wrong drugs.

"There was an implicit good faith agreement that things would get better and that was broken," said state Sen. Elaine Alquist, D-Santa Clara, chairwoman of the Senate Health Committee. "It was broken for the people of California and for a very vulnerable population, those that need the greatest care and those that can't advocate for themselves."

James Gomez, the chief executive of the state's nursing home trade organization, said the 2004 law has led to a 6 percent increase in staffing rates for the state's 1,100 nursing homes and an overall decline in turnover among caregivers, from 54 percent to 47 percent. California's homes now exceed the national average for meeting the staffing minimum, Gomez added.

"Is it working in every facility every day? No," said Gomez, leader of the California Association of Health Facilities. "But is it working in total? Absolutely."

Bottom line rewarded

Of the homes that cut staffing, 13 owned by Orange County-based Covenant Care stand out. The homes pared caregivers even as they got $15 million in additional funding.

The average profit at those 13 homes reached more than $900,000 in 2008, three times higher than the remaining 632 homes analyzed by California Watch.

The chain's chief operating officer testified last year in a deposition that part of the company's business plan called for housing more medically fragile patients. The strategy opens the door to higher reimbursements, according to critics, who say it can be dangerous to combine lower staffing rates with patients who need more attention.

Patients such as Charles McGrew.

The Texas-born janitor was admitted to the chain's Long Beach home, Royal Care Center, in early 2006. McGrew, a diabetic with high blood pressure and a history of infections, began to develop pressure sores on his ankles and tailbone at the home. But little was done to help him, according to court records filed by his family.

Meredith McGrew, 24, said one sore was like a hole in his father's back. Seeing it pained the younger McGrew, who remembers his father as a meticulously neat man.

"My family took it really hard," McGrew said. "My father was the one who looked out for a lot of them and raised them, so they were devastated by the care he was getting."

McGrew's left leg needed to be amputated due to one sore, the family alleged. He died three years ago at age 70.

His family blamed his death on mistreatment. Attorneys for Covenant said the family failed to prove the facility caused McGrew's problems. The case was settled and the terms are confidential.

Since his death, the home's staffing level sank below the state-mandated staffing minimum set in 2000. Royal Care's total profits, though, reached $540,000 in 2008 alone.

The Covenant chain, meanwhile, rewarded top administrators and nursing supervisors with bonuses based, in part, on how much profit each home generated, records show.

Covenant CEO Robert Levin would not comment about funding and staffing levels for this report.

Violations increase

The funding increases for nursing homes were made possible by the 2004 law that helped the state draw more money out of Washington, D.C., gradually boosting government spending from $3 billion in 2004 to nearly $4 billion in 2008.

The infusion of state and federal money has done nothing to slow the pace of violations and complaints. State regulators documented nearly 1,000 deficiencies for inadequate care in 2008, a 65 percent increase compared to 2005.

Regulators maintain the state hired more inspectors, which may account for the increase. But that doesn't explain the 23 percent rise in complaints filed by patients, advocates or their families. In 2004, before the law was enacted, nursing homes registered 4,499 complaints. In 2008, patients, their loved ones and advocates filed 5,549 complaints.

Despite mounting complaints and citations, state officials in charge of carrying out the new law granted nursing homes a powerful weapon to fight claims of inadequate care: more money.

They allowed homes to bill the state for legal costs spent to fight fines, citations and lawsuits alleging abuse and neglect.

Michael Connors, an advocate with California Advocates for Nursing Home Reform, called the policy "outrageous," saying the state was subsidizing mistreatment of patients at nursing homes.

Last month, the Department of Health Care Services, which oversees nursing homes, announced a proposed revision. Legal fees would be reimbursed only to those who win their battles to knock down citations. And the Department of Public Health said it will seek legislation to force nursing homes to pay fines into escrow accounts as soon as they file appeals.

Intended reform marred

The Nursing Home Quality Care Act of 2004 was designed to fix a glaring problem: Daily Medi-Cal rates paid to nursing homes in California were among the lowest in the nation.

An alliance of labor leaders and nursing home owners came up with a plan that wiped out a flat-fee system and replaced it with one that reimbursed nursing homes based on their costs.

The system allowed nursing homes to boost the amount of matching funds they got from the federal government. The homes first pay a fee to trigger the matching funds and additional revenues.

Not all homes benefited as much as others. Some homes even lost money, especially ones that serve fewer Medi-Cal patients. But most of the state's homes analyzed by California Watch drew a windfall of new money.

Homes could spend the new money on a variety of services.

But reimbursement rates increased if they spent the money on labor. Homes also got additional bonuses meant to boost hiring and wages.

Patient advocacy groups cried foul over the added payment, noting the nursing homes could ultimately spend it any way they wanted. And some advocates bristled over the lack of get-tough measures in the proposal. The California AARP ran full-page newspaper ads that said, "No blank check for bad nursing homes."

Still, the bill flew through the Legislature. When Gov. Arnold Schwarzenegger signed it, he directed the Department of Health Services to "reward quality care."

"We are making this investment in nursing facilities to ensure better care, and I intend to hold the industry and caregivers accountable for this critical responsibility," Schwarzenegger's 2004 signing statement said. Despite the governor's directive, the Schwarzenegger administration failed to follow through.

Instead, California Watch found, state regulators lavished new money on homes where findings of lax care mounted, where administrators failed to pay fines for poor care, and where corporate executives cut staffs in California and expanded chains elsewhere.

That bonus money has since been axed in the Department of Health Care Services which proposed a revised plan that was announced last month. The state would no longer pay nursing homes an 8 percent bonus on top of labor costs.

Raises not for lowest paid

The Golden State has about 1,100 licensed nursing homes that each year care for an estimated 100,000 people, including the elderly, disabled and those recovering from surgery.

California Watch reviewed financial and staffing data for the 645 nursing homes, that serve the largest number of low-income Medi-Cal patients who need 24-hour care. The 2004 law was set up to benefit these homes the most.

Of that group, 232 homes either cut staffing or wages or fell below the statewide staffing minimum, even as they received more money from Medi-Cal. The analysis found that 27 other homes fell behind in wages and staffing but had a reduction in funding.

Since the legislation was enacted, the California Department of Health Care Services gave the 645 homes analyzed by California Watch a total funding increase of nearly 25 percent over five years.

But the lowest-paid workers who perform the majority of the patient care in nursing homes did not see that kind of raise. Only 76 homes in the state gave nursing assistants a 25 percent pay increase.

Adjusting for inflation, average wages in more than 400 homes went down, the California Watch analysis shows.

In 2008, dozens of homes also operated beneath the decade-old staffing standard, which is set at three hours and 12 minutes of caregiver attention a day for every nursing home patient.

Applewood Care Center, a small nursing home in Sacramento, collected an additional $575,000 from 2004 to 2008. But during that same time, Applewood's ratio of staff to patients dropped 10 percent.

As the money started to flow, Applewood got hit with two serious citations, the first time as a result of lapses in care in the case of Earley Woods.

The 84-year-old grandmother had slipped away into the dark undetected, state regulators concluded. She steered her wheelchair out the backdoor of the nursing home at night, accidentally crashing down a 54-inch flight of concrete stairs in September 2005. Her skull was smashed, her collarbone broken, her wrist was fractured.

About a half-hour passed before Woods was discovered still strapped to her chair, which lay atop her. She was taken to the hospital.

Her daughter, Elaine Parham, had just minutes to absorb the shock of seeing her mother, bloody and bruised, before saying her final goodbye.

"This really can't happen to anyone else," Parham said in an interview.

Problems persisted

Terry Bane, the chief executive of the management company that operates Applewood, said Woods' death was a "tragic, tragic incident."

"It affected the employees in that building in a big way," Bane said.

Applewood was fined $100,000 after Woods died. The facility pledged to upgrade alarms on doors and improve lighting around the building. It also gave pay increases to nurses, which helped lower the staff turnover rate.

But problems persisted.

In late 2006, one patient was taken to the emergency room for dehydration. Eleven days later, the same 89-year-old woman was sent back to the hospital with "very severe dehydration," a citation report says. Several months later, state regulators concluded that the facility did not try hard enough to save a man who died of asphyxiation after food got lodged in his airway.

Regulators cited Applewood $20,000 in the dehydration case and $100,000 for causing the man's death.